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How do you understand our political system works? It could be something like this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills become law. Legislation is maintained by the courts. That's it. However, that’s how it operated in the past. Those days are over.

The Rise of Secret Courts

Nowadays, international firms, or the billionaires that control them, can sue nation states for the policies they pass, at private courts composed of business advocates. Such disputes take place in secret. Unlike our courts, these tribunals provide no right of appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, or even enterprises headquartered in this country. The door is open exclusively to corporations operating from foreign soil.

If a tribunal rules that a government measure may compromise the corporation’s projected profits, it can award compensation of hundreds of millions, running into billions.

This compensation constitute not tangible damages but compensation the panel members decide the company could potentially have made. The administration could be forced to rescind the measure. It becomes hesitant to introducing similar legislation in that area, worried about incurring a lawsuit.

A Process Spiralling Out of Control

Historically high figures of legal actions are being initiated, as companies take cues from each other, and hedge funds bankroll lawsuits in return for a share of the settlements. The result? Sovereignty and democracy are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it can trump domestic law and the rulings enacted by elected bodies is that this clause has been inserted – absent public approval, and often in conditions of profound opacity – inside international trade agreements.

A Concrete Example: The UK Coalmine

A year ago, environmental campaigners secured a significant win at the High Court. The justice determined that schemes to open the first deep coalmine in the UK for a generation, in northwest England, were unlawfully approved by the previous government, which had endorsed the bizarre claim that the mine would have no impact on national carbon targets. The Labour government subsequently revoked the consent the previous administration had issued. Currently, this success is under threat by an foreign court accountable to no one but the companies bringing the case.

Last August, a corporate entity whose final controllers reside in the Cayman Islands lodged a claim versus the UK government. The previous week a arbitration panel in Washington DC was established to hear it.

The company is litigating against the UK for the money it could have earned if the mine had been allowed to commence operations. The public has no idea how much this sum represents. Who is representing it challenging the British government? A sitting MP, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The government makes a decision, the national judiciary supports it, then a international entity contests it through an unaccountable private court, and a elected official acts on its behalf.

The Russian Lawsuit

Concurrently that the tribunal on the mining lawsuit was appointed, we learned from a government response that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. Details are scarce of the case so far, but it appears probable that he’ll use the arbitration process to challenge the sanctions the UK levied against him subsequent to the war in Ukraine. He has initiated proceedings against Luxembourg on these grounds, seeking $16bn: an amount representing half state's annual revenue. Included in the counsel acting for him in that case? Cherie Blair, wife of the previous PM.

Legal experts argue that the EU’s hesitation in utilising seized Russian assets as security for its aid for Ukraine is due to concerns within Belgium that it could be taken to court in the ISDS tribunals, under a trade agreement. This unprecedented, secretive influence over democratic administrations might be preventing the money Ukraine desperately needs.

Misleading Claims and Escalating Threats

Politicians promised that these scenarios wouldn’t happen. In 2014, a government leader, promoting the largest and riskiest of all investment pacts, told us: “The UK has signed trade deal upon trade deal and there has not been a case in the past.” A consultant on this issue labelled critics of “alarmism … in reality, ISDS barely touches the UK much”. The overall message appeared to be that only poorer nations should be concerned by such legal actions. Cautionary notes that “once firms begin to understand the authority bestowed upon them, they will turn their attention from the poorer states to the wealthy nations” were met with general mockery.

That threat has come to pass. Recently, oil and gas and extraction companies have initiated a unprecedented number of claims against nations across the economic spectrum, challenging – as in the case of the UK mine – government attempts to prevent environmental catastrophe. Corporations have so far won $114bn through ISDS, of which energy giants have secured eighty-four billion dollars. That is equivalent to the combined GDP